Item 1.01. Entry into a Material Definitive Agreement
On August 2, 2021, VMware, Inc. ("VMware") completed a public offering of
$1,000,000,000 aggregate principal amount of its 0.600% Senior Notes due 2023
(the "2023 Notes"), $1,250,000,000 aggregate principal amount of its 1.000%
Senior Notes due 2024 (the "2024 Notes"), $1,500,000,000 aggregate principal
amount of its 1.400% Senior Notes due 2026 (the "2026 Notes"), $750,000,000
aggregate principal amount of its 1.800% Senior Notes due 2028 (the "2028
Notes") and $1,500,000,000 aggregate principal amount of its 2.200% Senior Notes
due 2031 (the "2031 Notes" and, together with the 2023 Notes, the 2024 Notes,
the 2026 Notes and the 2028 Notes, the "Notes"). The Notes were offered under
VMware's Registration Statement on Form S-3ASR (Registration No. 333-237417),
filed with the Securities and Exchange Commission (the "SEC") on March 27, 2020,
and were sold pursuant to an Underwriting Agreement, dated as of July 20, 2021,
between VMware and Barclays Capital Inc., BofA Securities, Inc., Citigroup
Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the
several underwriters. Net proceeds from the sale of the Notes are expected to be
approximately $5,957,015,000, before expenses but after deducting underwriting
discounts. On April 14, 2021, VMware and Dell Technologies, Inc. ("Dell")
entered into a Separation and Distribution Agreement, pursuant to which, subject
to the satisfaction of all closing conditions, Dell will distribute the shares
of Class A common stock and Class B common stock (collectively, the "Common
Stock") owned by its wholly owned subsidiaries, to the holders of shares of Dell
as of a record date determined pursuant to the Separation and Distribution
Agreement on a pro rata basis (the "Spin-Off"). Subject to the various
conditions, VMware will also pay a cash dividend, pro rata, to each of the
holders of Common Stock (including Dell) immediately prior to the Spin-Off in an
aggregate amount equal to an amount to be mutually agreed by Dell and VMware
between $11.5 billion and $12.0 billion (the "Special Dividend"). The net
proceeds from the sale of the Notes are expected to be used to fund a portion of
the Special Dividend and, to the extent any proceeds remain, for general
corporate purposes. In the event that the closing of the Spin-Off has not
occurred on or prior to the earlier of (i) (x) April 28, 2022 or (y) if the
Separation and Distribution Agreement is amended on or prior to April 28, 2022
to extend the date by which the Spin-Off must be consummated to a date later
than April 28, 2022, the earlier of such extended date and July 28, 2022 and
(ii) the date the Separation and Distribution Agreement is terminated, VMware
will be required to redeem all outstanding 2023 Notes, 2024 Notes, 2028 Notes
and 2031 Notes at a special mandatory redemption price equal to 101% of the
aggregate principal amount of the Notes being redeemed, plus accrued and unpaid
interest, if any, to, but not including, the date of such special mandatory
redemption. The 2026 Notes are not subject to the special mandatory redemption,
and, if the Spin-Off is not consummated, VMware expects to use the net proceeds
thereof for general corporate purposes, which may include debt repayment.
The Notes were issued pursuant to the Indenture, dated as of August 21, 2017
(the "Base Indenture"), between VMware and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "Trustee"), on the terms and conditions set forth
in (i) the Seventh Supplemental Indenture, dated August 2, 2021 (the "Seventh
Supplemental Indenture"), in respect of the 2023 Notes, (ii) the Eighth
Supplemental Indenture, dated August 2, 2021 (the "Eighth Supplemental
Indenture"), in respect of the 2024 Notes, (iii) the Ninth Supplemental
Indenture, dated August 2, 2021 (the "Ninth Supplemental Indenture"), in respect
of the 2026 Notes, (iv) the Tenth Supplemental Indenture, dated August 2, 2021
(the "Tenth Supplemental Indenture"), in respect of the 2028 Notes, and (v) the
Eleventh Supplemental Indenture, dated August 2, 2021 (the "Eleventh
Supplemental Indenture" and, together with the Base Indenture, the Seventh
Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth
Supplemental Indenture and the Tenth Supplemental Indenture, the
"Indenture"), in respect of the 2031 Notes. The Indenture includes customary
representations and covenants by VMware. These covenants include limitations on
VMware's ability, with significant exceptions, (i) to incur debt secured by
liens on certain property above a threshold, (ii) to engage in certain sale and
leaseback transactions involving certain property above a threshold and (iii) to
consolidate, merge, sell, lease or convey all or substantially all of VMware's
assets. Upon the occurrence of both (i) a change of control of VMware (as
defined in the Indenture) and (ii) a downgrade of the Notes below an investment
grade rating by each of Fitch Ratings Ltd., Moody's Investors Service, Inc. and
S&P Global Ratings within a specified period, VMware will be required, subject
to significant exemptions, to make an offer to purchase the Notes at a price
equal to 101% of the aggregate principal amount of such Notes, plus accrued and
unpaid interest to the date of repurchase, as set forth in more detail in the
prospectus supplement filed by VMware with the SEC on July 22, 2021 (the
"Prospectus Supplement").
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The Notes are VMware's unsecured obligations and rank equally in right of
payment with its other unsecured and unsubordinated indebtedness from time to
time outstanding. The 2023 Notes will mature on August 15, 2023, the 2024 Notes
will mature on August 15, 2024, the 2026 Notes will mature on August 15, 2026,
the 2028 Notes will mature on August 15, 2028 and the 2031 Notes will mature on
August 15, 2031. Interest on the Notes will be payable on February 15 and
August 15 of each year, commencing February 15, 2022. The interest rate on the
2023 Notes is 0.600% per annum, the interest rate on the 2024 Notes is 1.000%
per annum, the interest rate on the 2026 Notes is 1.400% per annum, the interest
rate on the 2028 Notes is 1.800% per annum and the interest rate on the 2031
Notes is 2.200% per annum. The 2023 Notes were sold to the public at 99.895% of
par, the 2024 Notes were sold to the public at 99.952% of par, the 2026 Notes
were sold to the public at 99.830% of par, the 2028 Notes were sold to the
public at 99.481% of par and the 2031 Notes were sold to the public at 99.803%
of par.
The 2023 Notes will be redeemable in whole at any time or in part from time to
time, at VMware's option, prior to the maturity thereof, at a redemption price
as calculated by us equal to the greater of (i) 100% of the principal amount of
the 2023 Notes to be redeemed and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon (exclusive of
interest accrued to the date of redemption), discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the then current treasury rate plus 10 basis points for the
2023 Notes, plus in each case, accrued and unpaid interest, if any, on the
amount being redeemed to, but excluding, the date of redemption.
The 2024 Notes will be redeemable in whole at any time or in part from time to
time, at VMware's option, prior to August 15, 2022 (the "2024 Par Call Date"),
at a redemption price as calculated by us equal to the greater of (i) 100% of
the principal amount of the 2024 Notes to be redeemed and (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon that would be due if the 2024 Notes matured on the 2024 Par Call Date
(exclusive of interest accrued to the date of redemption), discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current treasury rate plus 10 basis points for
the 2024 Notes, plus in each case, accrued and unpaid interest, if any, on the
amount being redeemed to, but excluding, the date of redemption. On or after the
2024 Par Call Date, the 2024 Notes will be redeemable in whole at any time or in
part from time to time, at VMware's option, at a redemption price equal to 100%
of the principal amount of the 2024 Notes to be redeemed, plus accrued and
unpaid interest, if any, on the amount being redeemed to, but excluding, the
date of redemption.
The 2026 Notes will be redeemable in whole at any time or in part from time to
time, at VMware's option, prior to July 15, 2026 (the "2026 Par Call Date"), at
a redemption price as calculated by us equal to the greater of (i) 100% of the
principal amount of the 2026 Notes to be redeemed and (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon that would be due if the 2026 Notes matured on the 2026 Par Call Date
(exclusive of interest accrued to the date of redemption), discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current treasury rate plus 15 basis points for
the 2026 Notes, plus in each case, accrued and unpaid interest, if any, on the
amount being redeemed to, but excluding, the date of redemption. On or after the
2026 Par Call Date, the 2026 Notes will be redeemable in whole at any time or in
part from time to time, at VMware's option, at a redemption price equal to 100%
of the principal amount of the 2026 Notes to be redeemed, plus accrued and
unpaid interest, if any, on the amount being redeemed to, but excluding, the
date of redemption.
The 2028 Notes will be redeemable in whole at any time or in part from time to
time, at VMware's option, prior to June 15, 2028 (the "2028 Par Call Date"), at
a redemption price as calculated by us equal to the greater of (i) 100% of the
principal amount of the 2028 Notes to be redeemed and (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon that would be due if the 2028 Notes matured on the 2028 Par Call Date
(exclusive of interest accrued to the date of redemption), discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current treasury rate plus 15 basis points for
the 2028 Notes, plus in each case, accrued and unpaid interest, if any, on the
amount being redeemed to, but excluding, the date of redemption. On or after the
2028 Par Call Date, the 2028 Notes will be redeemable in whole at any time or in
part from time to time, at VMware's option, at a redemption price equal to 100%
of the principal amount of the 2028 Notes to be redeemed, plus accrued and
unpaid interest, if any, on the amount being redeemed to, but excluding, the
date of redemption.
The 2031 Notes will be redeemable in whole at any time or in part from time to
time, at VMware's option, prior to May 15, 2031 (the "2031 Par Call Date"), at a
redemption price as calculated by us equal to the greater of (i) 100% of the
principal amount of the 2031 Notes to be redeemed and (ii) the sum of the
present values of the remaining
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scheduled payments of principal and interest thereon that would be due if the
2031 Notes matured on the 2031 Par Call Date (exclusive of interest accrued to
the date of redemption), discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the then
current treasury rate plus 15 basis points for the 2031 Notes, plus in each
case, accrued and unpaid interest, if any, on the amount being redeemed to, but
excluding, the date of redemption. On or after the 2031 Par Call Date, the 2031
Notes will be redeemable in whole at any time or in part from time to time, at
VMware's option, at a redemption price equal to 100% of the principal amount of
the 2031 Notes to be redeemed, plus accrued and unpaid interest, if any, on the
amount being redeemed to, but excluding, the date of redemption.
The Seventh Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth
Supplemental Indenture, the Tenth Supplemental Indenture and the Eleventh
Supplemental Indenture are filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to this
Form 8-K, respectively, and are incorporated herein by reference. The foregoing
summary of the terms of the Indenture and the Notes does not purport to be
complete and is qualified in its entirety by reference to the Indenture and the
Notes.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit
Number Description of Exhibit
4.1 Indenture, by and between VMware and The Bank of New York Mellon
Trust Company, N.A., as trustee, dated August 21, 2017 (incorporated
by reference to Exhibit 4.2 to VMware's Annual Report on Form 10-K for
the year ended January 29, 2021).
4.2 Seventh Supplemental Indenture, by and between VMware and The Bank
of New York Mellon Trust Company, N.A., as trustee, dated August 2,
2021.
4.3 Eighth Supplemental Indenture, by and between VMware and The Bank of
New York Mellon Trust Company, N.A., as trustee, dated August 2, 2021.
4.4 Ninth Supplemental Indenture, by and between VMware and The Bank of
New York Mellon Trust Company, N.A., as trustee, dated August 2, 2021
4.5 Tenth Supplemental Indenture, by and between VMware and The Bank of
New York Mellon Trust Company, N.A., as trustee, dated August 2, 2021
4.6 Eleventh Supplemental Indenture, by and between VMware and The Bank
of New York Mellon Trust Company, N.A., as trustee, dated August 2,
2021
5.1 Opinion of Gibson, Dunn & Crutcher LLP, dated August 2, 2021.
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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